Fortis-CH Energy deal shorts public, critics contend

POUGHKEEPSIE, N.Y. -- Support from leaders in Ulster and Dutchess counties for the proposed takeover of CH Energy Group by Canadian energy company Fortis is being challenged at various levels of government.

Dutchess County Legislator Joel Tyner said Wednesday that CH Energy (the parent company of Central Hudson Gas & Electric Corp.) and Fortis seem more concerned about their own compensation packages than setting aside funds for community benefit projects.

Tyner, D-Clinton, noted the state Public Service Commission staff recommended that at least $85 million be set aside for community benefits "and that's what should be happening for the local counties." But "it's only about $50 million that's being proposed," he said.

A year ago, Fortis proposed contributing only $20 million in public benefit funding, but it reached a compromise with the Public Service Commission staff in January to make the amount $49.2 million. The compromise was supported by Dutchess County Executive Marcus Molinaro, Ulster County Executive Michael Hein and Orange County Executive Ed Diana.

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"Through this unprecedented partnership ... we have been able to ensure that the Central Hudson/Fortis merger provides an enhanced $5 million economic development fund to benefit the region and a 12-month rate freeze that better serves all of our citizens," Hein said.

A 15-member group led by Rosendale Councilwoman Manna Jo Greene and Jennifer Metzger, who chairs the Rosendale Commission for Conservation of the Environment, contend CH Energy officers will benefit far more than the economic development fund.

"The proposed community benefits are minuscule compared to what the top executives at CH Energy will walk away with," they wrote in a letter to the state commission, adding that "Fortis and Central Hudson shareholders are about to get away with stealing money from ratepayers."

Termination packages for executives of CH Energy Group and operating subsidiary Griffith were approved by shareholders in June 2012. Included were $8.74 million plus $2.5 million in stock payments for President and Chief Executive Officer Steven Lant; $3.65 million for Executive Vice President and Chief Financial Officer Christopher Capone; $5.9 million for Executive Vice President James Laurito; $1.64 million for Griffith President and Chief Operating Officer W. Randolph Groft; and $2.17 million for Executive Vice President and General Counsel John Gould.

Tyner said the agreement should be rejected by the Public Service Commission, which he said should put an emphasis put on finding a better deal for ratepayers. He said there are about 4,000 locally owned municipal utilities in the state that "sell electricity for about half" of Central Hudson's rate.

"It is an outrage," Tyner said. "For the better part of the last decade ... (Central Hudson) makes typically between $30 million and $40 million a year in profit."

State officials received objections or concerns from only 18 people during hearings two weeks ago in Kingston and Poughkeepsie. State Assemblyman Kevin Cahill, D-Kingston, an attorney, was among speakers concerned that there would be legal problems if a Canadian firm owned CH Energy.

"The Public Utility Law Project has pointed out that there could be very significant international legal tangles in how we proceed given the fact that ... the companies in Canada are subject to NAFTA (the North American Free Trade agreement), as are we in the United States, that places severe restrictions on the ability of regulators to fully regulate those who they might have otherwise been able to impose public will upon," Cahill said.

Officials with Fortis did not immediately return calls seeking comment about the opposition. Central Hudson spokesman John Maserjian said he does not consider the opposition to be growing and that the utility will remain dedicated to its customers.

"There's certainly some folks who have some concerns about what may happen when the Fortis merger is approved by the Public Service Commission, if it is approved," Maserjian said. "I would still say that, after the merger, Central Hudson will still be Central Hudson, we'll still be regulated by the state of New York, we're still the local utility. Very little will change in terms of operations and the way we operate."